IFRS Conference

I just had the privilege of attending the AICPA IFRS Conference in Boston last week. There was an awesome lineup of speakers. Topics ranged from SEC enforcement of unreconciled IFRS financials to detailed discussion with FASB and IASB staff members on the leasing and revenue recognition proposals. I wanted to take a moment to highlight a few of my observations from the meeting.

No one seems to think that SEC convergence/endorsement proposal is the best way to implement IFRS, but everyone seems resigned to the fact that it is probably the only political way to get the U.S. to IFRS over time.

The Chairs of the IASB and FASB are not ivory tower purest. One of the highlights of the meeting was when Hans Hoorgervorst stated he really wasn’t sure what OCI (Other Comprehensive Income) was and Leslie Siedman said she did know what it was and proceeded to explain that OCI was the place to offset changes in the balance sheet that weren’t part of net income. Not exactly a principles based answer – but it is honest.

The slow down of the MOU projects will not impact the timing of a decision from the SEC on IFRS. This was repeated several times by many speakers including representatives of the SEC, the FASB and the IASB.

IFRS is already here in the U.S. There are many foreign subsidiaries that are already reporting and being audited under IFRS. In addition, many companies still reporting under U.S. GAAP are dealing with lots of subsidiaries (IBM reported their number is 57 and growing) keeping their books under IFRS. Users are comparing U.S. GAAP based companies with IFRS based companies every day when making investment decisions.

Converting to IFRS will not be a simple exercise for U.S. companies. Our accounting processes are just that – very processed based. How to account for something is decided at a high level and the rest of the staff often then just does what they are told. Under IFRS, judgment will have to pushed down much further into finance organizations. This has implications on internal Controls (can we say SOX 404), the need for training on how to make decisions, not just how to process transactions, and documentation of decisions which will be much more extensive under IFRS.

After almost 40 years, the future of the FASB is very cloudy. What will be there role in private company standards? What will be there role in public company standards? Do they even have a reason for continued existence 5 years from now?

There were many other topics covered, but I think this gives you a flavor of what was covered. One of the great things about speaking English is it is the language of business across the world. We don’t have to learn French, German, Chinese or Japanese to conduct business in the world. IFRS is no longer becoming – it is – the world wide financial language for business. While sharing many “words” with U.S. GAAP, it is a different language and even if the U.S. takes a slow road to adoption, learning the language is a must for any CPA that wants to be able to converse in the business world.